The second message is good news for shareholders. The more profit DBS earns, the more shareholders will get in dividends. In addition, DBS has excess capital. Its common equity tier 1 (CET1) ratio was 14.6% as at Dec 31, 2022. This will increase by 2 percentage points (ppt) when Basel IV is implemented, enabling DBS to redeem more expensive additional tier 1 (ATI) capital and subordinated debt classified as tier 2 capital (CET2), lowering its funding costs.
DBS Group Holdings’ management gave two interesting messages on Feb 13 which got drowned out in its exposure to the crisis at India’s Adani Group.
One of them is the potential for DBS to hit $10 billion in net profit for FY2023 although no analyst has yet made that forecast. That would be an all-time high for a local bank. Already DBS’s earnings have surpassed that of Standard Chartered Bank.
